Stratum Metals (ASX: SXT) is raising $1 million through the issue of convertible notes to meet exploration expenditure commitments for its Menzies projects in Western Australia.
The funds will position the company well for its ongoing exploration work which has defined multiple new conductors and sampled bonanza gold grades of up to 274 grams per tonne gold.
It has also highly prospective massive sulphide conductor that managing director Martin Holland described as being "as strong as it gets".
The company had recently discovered bonanza gold grades - with individual assays as high as 274g/t gold - from the continuation of the shaft spoil sampling program at the East Menzies Goldfields Project.
In total, 1,332 samples were collected from 444 workings stretching over 11 kilometres. This has also identified potential for wall rock mineralisation across the project.
The new data is now being considered in addition to all other historic and newly generated data to identify and prioritise drill targets.
Core Geophysics has also a final report on the HeliTEM survey flown in March 2013.
This has defined a total of 229 anomalies with 20 conductors classified as priority targets.
These will be used as vectors for gold and/or base metal mineralisation across the project. 105 of the anomalies also gave a magnetic response, which can be indicative of nickel, copper and zinc sulphides.
Notably, managing director Martin Holland told Proactive Investors in June that one of the conductors is believed to be a very large massive sulphide conductor that was "as strong as it gets".
He added the conductor was an odd shape, unlike other conductors that were big long bands, making it less likely to be a simple geological horizon.
The company had also in August 2013 expanded East Menzies with the acquisition of three existing prospecting licences for $110,000 while joint venture company Menzies Goldfields Ltd pegged a new prospecting licence.
The Convertible Notes have a term of 12 months, and can be redeemed in either shares or cash.
The Coupon rate is 8% per annum, with interest to be paid quarterly in arrears in the form of fully paid ordinary shares in Stratum.
Shares will be issued at the lesser of a 20% discount to the 15 day VWAP or $0.12 per share.
A two month voluntary suspension will be applied to any shares issued upon conversion of the Convertible Notes.
While Stratum has uncovered bonanza gold grades from sampling at East Menzies Goldfields Project, it is the potential very large massive sulphide conductor detected by a HeliTEM survey close to the Goodenough Mine that could significantly re-rate the company if confirmed.
This conductor is considered to be a highly prospective drilling target and could well be the subject of a program funded by the funds to be raised from the convertible note issue.
With a market valuation of just $5.7 million, Stratum's share price - currently at $0.09 - is well leveraged to any exploration success.
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